IBM doesn’t like me. After my column last week predicting massive cuts at the giant computer company, IBM now says I’m wrong, and that there will be nowhere near 110,000 IBM employees laid off. But like my young sons who never hit each other but instead push, slap, graze, or brush, I think IBM is dissembling, fixating on the term 110,000 layoffs, which by the way I never used. Whatever the word, what counts is how many fewer people will be paid by IBM on March 1 compared to today.
There are many ways to spin a work force reduction. Here’s how one IBMer source (I have dozens) explained the tricks to me this morning:
“If you're following the Endicott Alliance discussion board (an organization of IBM workers) you know that they are only 'officially' laying off several thousand (maybe 12K I'm guessing), but others are being pushed out by being given poor performance ratings. This includes people on their 'bridge to retirement' program that took that option, thinking it kept them 'safe' from resource actions (layoffs/firings). There is a loophole that says they can be dismissed for 'performance' reasons, which is exactly why many of my long-time, devoted, hard working peers are suddenly getting the worst rating, a 3. It's so they can be dismissed without any separation package and no hit to the RA, or workforce rebalancing, fund... It used to be something like 10 percent of employees 'had' to be labeled 3's, but recently the required number of 3's was way, way upped according to some managers. So that's how they are doing it… Some managers have teams of hard working people that put in tons of overtime and do everything they are asked, and by requirement some must be given 1's, some 2+, some 2, and unfortunately some 3's… They also got rid of some employees by 'stuffing' them into the Lenovo x86 acquisition, shipping tons of people over there that never even worked on x86 stuff. Lenovo has discovered this and has given some of them a way better package (year salary and benefits), and taking it up quietly with IBM.”
The company has a bad year, so what do you do? Throw a large number of employees under the bus. By any measure this will be a big staff reduction.
Another source told me the plan was to give the people notice before January 28th so they would be off the books by the end of February — one month. That implies a lot of firings, offshore staff reductions, contractors released or strongly motivated early retirements. None of those are layoffs. There will probably be lots of normal layoffs, too, with the required notice. I’m told that senior managers throughout IBM have been pleading for the last few months with higher-up executives not to go through with this because of the risk of consequences such as IBM "breaking" accounts or failing to meet contract obligations. IBM's customers are going to be the biggest casualty to this week’s staff reductions. That is the message IBM is likely trying to avoid.
